Bearish Break Sends GBPUSD Toward 1.30 As the Trends Shifts

Last week, GBPUSD experienced a notable bearish reversal, dropping nearly 4 cents. Sellers continued to push lower today, bringing the pair closer to 1.34, as USD buying pressure resumed. Today’s decline saw the breach of the 50-day SMA around 1.31, a level that had previously offered support.

GBP/USD Chart Daily – The 50 SMA Has Been Broken

This move was triggered by the release of the eagerly awaited US CPI report for September and now the 50 SMA (yellow) has turned into resistance after being broken. Despite the downside pressure, the increase in US unemployment claims has tempered the slide somewhat. The strong NFP employment report last week effectively ruled out a second 50 basis point rate cut by the Fed in November. At the same time, the Bank of England’s dovish tone has further undermined the GBP relative to most other major currencies.

Weekly Initial and Continuing Unemployment Claims Report

• Initial Jobless Claims:

  • 258K vs. 230K estimated.
  • Previous week: 225K.
  • 4-week moving average: 231K vs. 224.25K previously.

• Continuing Jobless Claims:

  • 1.861M vs. 1.830M estimated.
  • Prior week revised from 1.826M to 1.819M.
  • 4-week moving average: 1.832M vs. 1.828M previously.

• Largest Weekly Changes in Initial Claims:

  • Increases: Michigan (+1,187), Washington (+892), Indiana (+657), California (+638), Iowa (+568).
  • Decreases: Georgia (-1,237), Florida (-919), Texas (-532), Virginia (-481), New York (-451).

Market reactions to the upbeat US CPI report have been mixed. Initially, the dollar surged to daily highs following the release of the inflation data. However, it subsequently pulled back as unemployment claims rose to 250K. Overall, the US dollar remains broadly stronger today on the back of the CPI data, leading to a further GBP/USD drop by over a cent to 1.3021, where it is now trading around 1.3050.

GBP/USD Live Chart

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Skerdian Meta

Lead Analyst

Skerdian Meta Lead Analyst. Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.

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